Why is the Federal Reserve Propping Up the Bank of Libya?

Sunday, 03 April 2011 10:25

Vermont Senator Bernie Sanders has for months been leading the charge to expose the sweetheart deals the Federal Reserve has worked out for multinational banks and corporations at the same time that working Americans, small businesses, local governments and schools boards struggle to stay afloat financially.

Sanders has tried to make the point that it is simply absurd for the Fed to bail out foreign firms and bad banks and to provide them with low-interest loans at the same time that they are reaping massive profits – and at the same time that federal, state and local governments are supposedly broke.

The Obama White House and other members of Congress grudgingly went along with a proposal Sanders made, as part of last year’s Wall Street reform legislation, to force the Fed to reveal its previously secret bailouts and backroom deals. But, for the most part, official Washington has been slow to share the Vermont senator’s outrage.

They may change now that Sanders is exposing what may be the most unsettling Fed deal yet.

On Thursday, the senator asked Federal Reserve officials to explain why they provided more than $26 billion in credit to an Arab intermediary for the Central Bank of Libya. According to a review by Sanders’ office, the Fed made at least 46 emergency, low-interest loans to the Arab Banking Corp., in which the Central Bank of Libya owns a 59 percent stake.